--%>
Assignment Help - homework help

Demand-pull inflation

What is "demand-pull" inflation?

E

Expert

Verified

This is a common form of inflation in which demand outstrips supply to cause a rise in price and therefore inflation. In the AD AS approach in macroeconomics, it is shown as a continuous rise in AD with a constant AS. This rise can be due to a rise in any of the components of AD- consumption spending, investment spending, and government spending or net exports. If the economy is not on full employment level then the rise in price is accompanied by a rise in GDP as well. However if the economy is already at full employment then there is no rise in GDP, only price rises. This kind of demand pull inflation is less acceptable and more damaging to the economic agents. 

   Related Questions in Macroeconomics

  • Q : Why value of multiplier is low In poor

    In poor countries people spend a big percentage of their income so that APC and MPC are high. Yet, the value of multiplier is low. Explain why?

    		•
  • Q : Goals of Microeconomic Hello guys I

    Hello guys I need your advice. Please advise your view for following economics problems. Microeconomic goals consist of: (w) full employment. (x) efficient allotments of resources. (y) price level stability. (z) ec

    		•
  • Q : Value added technique for national

    What is the alternative name of value added technique of estimating national income? The alternative name of value added technique of estimating national income is production method.

    		•
  • Q : Explain Product Market Equilibrium. To

    To begin with, let us recall our three-sector product-market equilibrium model given as C + I + G = C + S + TTo this three-sector model, we now add the foreign trade-the exports (X) and imports

    		•
  • Q : Value of fiscal deficit Evaluate the

    Evaluate the value of fiscal deficit when primary deficit is 53,000 crores and interest on borrowings is Rs 5,000 crores?

    		•
  • Q : Sources of demand for foreign currency

    State main sources of demand for foreign currency? Answer: The four main sources of demand for foreign currency are as follows: A) To buy services and goods from other countries. B) To send a gift abroad.

  • Q : Explain about the marginalism theory

    Most economists believe such that people increase an activity when they perceive the expected additional benefits as exceeding the expected extra cost, but decrease their level of an activity whenever they believe the benefits from the last few units of the activity a

    		•
  • Q : Principles of macroeconomics Explain

    Explain the concept of “economies of scale” and “increasing returns”.

    		•
  • Q : Surplus of AD over AS-Inflationary gap

    Does a surplus of AD over AS always entail a condition of inflationary gap? Answer: No. Inflationary gap takes place only if AD > AS equivalent to full employmen

    		•
  • Q : Open-Economy Macroeconomics

    Open-Economy Macroeconomics   Suppose the structure of an economy with a flexible exchange rates is represented by:   C = 200 + 0.85*(Y - T)             &n

    		•